Yahoo’s profits soar, ad revenue drops

MULTI-YEAR OUTLOOK:The company said it would capitalize on partnerships with Google, Apple and others after reporting that display ad revenue was down 11 percent

AFP, SAN FRANCISCO

Marissa Mayer’s quest to revive Yahoo stumbled on Tuesday with word that revenue from display ads at the heart of its business shrank in the first three months of this year.

Yahoo profit soared to US$390.9 millionm, a 36 percent rise from the same period last year on the back of returns from stakes in Chinese Internet giant Alibaba (阿里巴巴) and Yahoo Japan. However, money from its own online ads sagged.

Yahoo’s share price fell more than 4 percent to US$22.80 in after-hours trade after the company reported that revenue fell 6.6 percent to US$1.14 billion in the quarter that ended on March 31.

Display ad revenue dropped 11 percent from the same period last year.

In contrast, the overall US digital ad market grew 14.8 percent to US$9.64 billion in the first three months of this year, according to industry tracker eMarketer.

“To get the company growing at the rate we would like will take several years,” Mayer said during an earnings call with financial analysts.

Google and Facebook are expected to account for 41.6 percent and 6.5 percent of US digital ad revenue this year, respectively, according to eMarketer.

“It’s a similar story in the display advertising market,” eMarketer said in a release.

Mayer joined Yahoo as the fifth chief executive there in as many years as the struggling Internet search pioneer tried to reinvent itself as a “premier digital media” company after withering in Google’s shadow.

Mayer has echoed the mantra of predecessors who maintained that the company could find prosperity by mining information about users to insightfully tailor online content and target money-making advertising.

On Tuesday, she likened her plan to get Yahoo back up to speed to a series of sprints, with the first leg comprised of bulking up the pool of talent at the company.

“We are nearing the end of the first sprint,” Mayer said. “Now, our focus will shift to building beautiful products and executing well against our strategy.”

The Sunnyvale, California-based company also planned to capitalize on multi-year partnerships with Google, Facebook, Apple and Microsoft.

Mayer praised what Facebook did with its Home software for smartphones powered by Google-backed Android software, calling the social network’s creation a “great product.”

Yahoo executives expected to make more strategic acquisitions, particularly of companies with teams adept at designing products for mobile devices.

Revenue from Internet search ads continued to fall short of expectations when Yahoo sealed a deal to power the service using Microsoft’s Bing engine, according to chief financial officer Ken Goldman.

“We talk to Microsoft every day to essentially optimize what we are doing together,” Goldman said, noting that an extension of the revenue guarantee was not expected.

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